Sam Uretsky

Discounting Health Care

California, the most populous state in the nation, is also the one
that has been trying to revive the New England town meeting. Some
concepts can't be exported. When a New Yorker finds something
objectionable, she writes a letter to the New York Times. When a
Californian sees a social problem, she puts a proposition on the
state ballot. This, perhaps more than anything, justifies the concept
of representative democracy.

Faced with the challenge of unaffordable drug costs, there are
two propositions on the current California ballot. Proposition 78 was
written by the pharmaceutical industry and is backed by an $80
million budget. According to this proposition, drug companies may, if
they so choose, offer discounts on their products to low-income,
uninsured Californians. If they don't want to participate, they don't
have to. It's not clear why they need a law to give them permission,
but most likely they're trying to use Proposition 78 to keep the
public eye away from Proposition 79, which is backed by labor and
consumer groups.

Proposition 79 would also have the drug manufacturers offer
discounts to low-income uninsured Californians, but there would be
nothing voluntary about it. If any company declines to participate,
then all its products could be removed from Medi-Cal, the state's
Medicaid formulary. Prop 79 also allows attorneys to sue any drug
company that's charging "unconscionable" prices without having to
produce a client who has been harmed.

The Los Angeles Times estimates that Prop 78 would provide
discounts in the range of 40%, while Proposition 79 would aim for
about 60%. Proposition 79 would also cover a larger number of people.
While the newspaper finds fault with both plans, the key point seems
to be overlooked by both the drug companies and the consumer groups:
The minimum wage in California is $6.75 an hour ($8.50 in San
Francisco). Drugs are expensive. When you're bleeding to death, does
it really matter whether you're bleeding from the carotid artery or
the jugular vein? There are a few drugs that are reasonably
affordable -- but for a lot of people, anything, even pocket
change, is too much.

The March 1999 issue of Health Affairs published a study of the
effects of Medicaid co-payments on the rates of prescriptions filled.
These co-payments range from a low of 50¢ to a high of $3. The
researchers found that the rate of drug use declined substantially in
states that enacted a co-payment requirement.

While the study only had 1,302 respondents, not, perhaps, enough
to reach definitive conclusions, it appears that even this modest
price is enough to keep people from filling their prescriptions. Even
then, in 30% of cases, pharmacists didn't collect the co-payment,
although in many cases this represented the total margin over the
cost of the drug.

There don't appear to be any more recent studies, but it seems
reasonable to think that conditions are worse now than they were in
1999. Inflation, although moderate, has continued, and wages have not
kept pace. The uninsured poor may be barely better off in terms of
income than those who qualify for Medicaid, yet for the uninsured,
the prices of drugs, even at a deep discount, are dramatically
higher. Many of these people may actually be Medicaid eligible, but
haven't worked their way through the system yet. The California
propositions, even if they offer 60% discounts, are still for the
benefit of the relatively well-to-do.

Since Hillary Clinton's universal health insurance plan got
knocked down, nobody has brought up the subject seriously. It's
possible that things have gotten bad enough for people to recognize
the severity of the health care problem and actually go beyond paper
clips and string. The Medicare prescription drug benefit plan, due to
begin next year, is a cruel hoax that will just make conditions
worse. The most recent United Nations report on healthy life spans no
longer has the US in a dead heat with Slovenia -- we've fallen
behind.

Discounts are nice, no question. But at current prices for
prescription drugs, even deep discounts aren't nearly enough. For
people on Medicaid, those living at or just above the poverty level,
sometimes $1 is too much. It's time to stop looking for patch jobs,
discount plans and Canadian drug stores, and start looking at a
health program that would assure everyone adequate care at a price
that everyone can afford. If that seems too expensive, take the money
out of the transportation bill and the energy bill, and (unlike the
Medicare drug benefit absurdity) ask the drug manufacturers to give
discounts.